The EAT have concluded that a 50% shareholder and director of a company may also be an employee, overruling the tribunal’s decision that joint control of a company is inconsistent with employee status. (Gladwell v Secretary of State for Trade and Industry). An employee is defined under the Employment Rights Act 1996 as “an individual who has entered into or works under… a contract of employment”.  A contract of employment means “a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing”.

This decision confirms previous Court of Appeal decisions that a person who acts as an employer is not prevented from being an employee. The fact that a person is a controlling shareholder is a significant factor in considering their employment status, but it is only one of a number of factors that need to be considered.

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